Wood Group confirms profit targets, progress on AFW integration

Wood Group said the integration of newly acquired Amec Foster Wheeler was progressing ahead of schedule and that total adjusted operating profits for the full year will be between $335m and $355m.

In the first update since the completion of the acquisition in early October, the energy services and industrial engineer said the reaction from clients has been positive and it has seen momentum in contract awards and see "good opportunities" to improve revenues.

Alongside reported full year earnings before interest, tax and amortisation for the Wood Group business and a contribution from AFW for the period from 9 October to 31 December of $335-355m, full year pro-forma EBITA from continuing businesses for the full calendar year will be $590-610m, "reflecting the current trading conditions and typical second half weighting of profit" in both businesses.

Integration of AFW has seen "significant progress" made, with sustainable annualised cost savings ahead of plan among middle management alone, with "good progress" on real estate rationalisation, merged bidding pipelines and aligned tendering and delivery governance.

"We remain very confident of delivering cost synergies of over $170m by the end of the third year following completion."

In the second half, Wood said it has seen a better than anticipated outcome on certain oil and gas projects, offset by delays and cost overruns on a small number of fixed price contracts in the legacy Transmission & Distribution and Environment & Infrastructure businesses.